Financial institutions now flourish across Kenya

In the wake of the Microfinance Act, introduced in parliament during 2006 prior to its enactment
in 2008, micro-lending services have spurred notable growth, more so, in the small-scale enterprises sector. Soon after the Donde Bill initiated debate on the microfinance regulations, the industry’s key players engaged in deliberations with the government. The principal purpose of the Microfinance Act, through licensing and supervision – is to streamline and regulate founding, business and operations of microfinance institutions in Kenya.

According to the Central Bank, the Microfinance Act 2006 and Microfinance [Deposit Taking Institutions] Regulations Act 2008 set out the legal, regulatory and supervisory framework to guide the sector’s operations within stipulated guidelines. More significantly, the Act further enables Deposit Taking Microfinance Institutions licensed by the Central Bank of Kenya to mobilize savings from the general public, thus promoting competition, efficiency and access.

The legislation was projected to play a pivotal role in the micro- finance industry by enhancing
financial markets and access to financial services and products by majority of the Kenyans.
Some of the visible and indelible milestones so far credited to Kenya’s growing Micro-finance segment, is the provision of numerous innovative packages unveiled soon after the Microfinance Act became legally operational during May 2008. The bulk of these products are tailored to particularly appeal to the previously unbanked and underbanked, grassroots communities whilst also uplifting their lifestyles.

MFB and Maisha MFB – with the latter as the latest entrant for the MFIs which operate under this category. The Caritas Micro-Finance Bank CEO, George M. Maina, asserts that micro-lenders are attaining significant gains and making tremendous
strides owing to the fact that there still exists increasing demand for tailor-made financial
services.

As one of the most recent legally licensed Micro Finance Bank, the CEO acknowledges the fact that Kenya’s economy has registered steady growth hence having more
MF banks in operation is healthy competition. “At Caritas, our core responsibility is to ensure all Kenyans are financially inclusive in terms of services delivery,” remarks Mr Maina. The bank offers an array of packages, which tackle challenges of having options for more products and quality services at affordable rates. It is important to note that the target market, adding up collectively to millions resident countrywide – translates to 30% of Kenya’s unbanked population.

Current statistics indicate there are an estimated 47 registered banks, SACCOS and MFBs all which post annual profits. The CEO notes that Caritas was founded from the Nairobi Diocese
Self Help group programme and movement – in existence for over three decades in the Archdiocese of Nairobi. “Almost every parish in the city has a self-help project operated along SACCOs model and as their respective services grew, the need to access larger cash/loan amounts has arisen hence the banking concept is an upscale of now available micro-finance products,” adds Mr Maina.

The fact that Caritas is a Christian institution does not imply the
MFB’s doors are closed to anyone in need of financial services. As a bank, the target clientele base is not only the Catholic faithful but also financially disadvantaged groups or individuals.
These range from those unbanked, micro-entrepreneurs who may not have without collateral assets, chamas [self-help groups] not only at the community but also national level. “Our mission as an MFB is to provide affordable/flexible and reliable financial services to spur wealth
creation; improve and uplift socialeconomic livelihoods of our customers,” concludes Maina.